Shares of sports betting platform DraftKings (NASDAQ:DKNG), backed by a notable media personality, popped higher on Thursday. On Tuesday, Jim Cramer of CNBC told investors that a buying opportunity exists in the online sportsbook following red ink. With the NFL playoff cycle in full bloom, the rabid popularity of the underlying football league should bolster DKNG stock.
Since closing at a multi-year high of $39 on Dec. 1, DraftKings shares experienced a pullback. However, Cramer saw this as a buy-the-dip prospect. On Tuesday’s Mad Money program, the market pundit noted “incredible public interest in the first weekend of the NFL playoffs.” Therefore, he sees a “great buying opportunity” in DKNG stock, particularly with the whole nation watching pro football.
Further, Cramer explained that DraftKings owns the most market share in the underlying online betting space. Emerging from a war of attrition as intense competition materialized a few years back, DKNG stock effectively represents a “last man standing” story. That’s similar to other narratives, such as Uber (NYSE:UBER) for ride-sharing or DoorDash (NASDAQ:DASH) for food delivery.
Significantly, with the battle for market share over, Cramer believes that the company can now focus on profitability. In his opinion, that’s a doable directive, as DraftKings would be spending less money on marketing and advertising.
DKNG Stock Could Ride the NFL’s Coattails
To be clear, not everyone is enamored with DKNG stock. According to Investor’s Business Daily, technology investor and entrepreneur Cathie Wood sold a portion of her DraftKings holdings on Wednesday via her asset management company ARK Invest. Nominally, the position was worth about $8.04 million based on yesterday’s closing price of $35.07.
Even Cramer himself acknowledged some of the difficulties facing DKNG stock. In particular, he acknowledged that DraftKings cannot conduct business in California and Texas, where sports betting is illegal. At the same time, legal momentum has been building, with Vermont legalizing the practice last year. Therefore, a green light in the two biggest states by population could easily lift DKNG.
For now, shares can possibly ride the NFL’s coattails. Compellingly, football continues to defy negative trends in sports viewership. Last November, Bloomberg reported that most sports have lost viewers:
“Ratings for the World Series, baseball’s biggest event, have declined by more than 30% over the last decade. The NBA finals, basketball’s biggest event, have also surrendered more than 30% of their audience.”
However, football — speaking of the last man standing — remains resilient. Per The Athletic, NFL games up to the point of publication (Dec. 22, 2023) averaged 17.5 million viewers across television and digital platforms, excluding international games. That happened to be the highest average since the equivalent comparison in 2015.
Why It Matters
It’s also possible that DKNG stock could get a nice lift from pop superstar Taylor Swift. With her relationship with one of the game’s top players, interest in the NFL has soared. That could also help bring DraftKings’ message across to a wide audience.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
